State dignitaries dedicated the site where a new 25-bed psychiatric hospital will be built in Berlin on Tuesday, January 8, 2013. / MADDIE MCGARVEY/FREE PRESS

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Construction workers help build a seven-bed facility that will house seven mentally ill individuals who require a locked residence in Middlesex. / MADDIE MCGARVEY/FREE PRESS

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BERLIN — Twenty-nine years ago Ken Libertoff, then-executive director of the Vermont Association for Mental Health, called on officials to close the state’s antiquated psychiatric hospital and develop a regional mental health system.

Tuesday Libertoff, now retired, stood in the mud on a seven-acre lot in Berlin with a crowd of state officials, lawmakers and employees who used to work at the state hospital in Waterbury before flooding forced its closure a year ago. They were there for a groundbreaking ceremony on a new, smaller acute-care psychiatric hospital.

The new hospital is one component in a distributed psychiatric care system the Legislature and Shumlin administration fashioned on the fly after Tropical Storm Irene struck.

“It is a profoundly important day for the state of Vermont and for mental health care,” Libertoff said.

The groundbreaking celebrated more than just the beginning of construction on a replacement hospital. Earlier Tuesday the Shumlin administration learned the range for federal disaster aid available to not only help pay for this project, but a host of other projects that make up for capacity lost when Irene inundated the Vermont State Hospital in August of 2011.

Before taking up the ceremonial shovels, Gov. Peter Shumlin announced that the Federal Emergency Management Agency and insurance would cover about $30 million of the $42.8 million in construction expenses for five hospital replacement projects. Vermont taxpayers could expect to pay $12 million to $15 million.

“That is a great victory for Vermont taxpayers,” Shumlin declared.

He had decided earlier in the fall to go ahead with planning, buying land and seeking permits for the 25-bed hospital in Berlin without knowing how much either FEMA or insurance would cover. The hospital’s price tag is $25 million-$28 million.

The Legislature and Shumlin administration also authorized:

• A $5.5 million, 14-bed unit at the Brattleboro Retreat expected to open in March.

• A $5.4 million, six-bed expansion at Rutland Regional Medical Center expected to open in April or May.

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• A $1.9 million renovation to create an eight-bed temporary hospital that just opened in Morrisville.

• A $1.5 million, seven-bed secure residential unit under construction in Middlesex and expected to open March 1.

All got under way without the state knowing how much financial help insurance and FEMA would provide.

“I have taken some heat over the past months,” Shumlin acknowledged, but said that given the crisis conditions under which the entire mental health system has operated since the sudden closing of the state psychiatric hospital, “We had no other choice.”

Shumlin defended his decision to plow ahead on all fronts, saying “I firmly believed FEMA and the federal government would give Vermont what it needs.”

Shumlin credited a new team from FEMA, which arrived in late summer, with “getting results.” State officials had been frustrated earlier in the year that FEMA couldn’t provide even a range for how much aid it could provide the state for these projects.

“This is a great resolution to our crisis,” Shumlin said, referring not only to resolving the financial uncertainty, but also in addressing the long-standing need to create a better system of care for Vermonters with mental illnesses.

Mark Landry, FEMA’s federal coordinating officer in Vermont, predicted the state could see some of the funds in as little as 30 days.

Landry noted that the Shumlin administration had been “putting our feet to the fire,” but he promised, “We will run side by side as long as it takes to get the job done.”

State officials also hope FEMA will provide estimates for the amount of money it would provide to help replace and reconstruct the office buildings in Waterbury, also closed due to Irene’s flood damage.

Shumlin said the heavy equipment would be ready to run as soon as the town of Berlin issues a required subdivision permit. The town already granted a conditional use permit for the project. It also needs two state permits relating to water supply.

“We hope to get this done in record time,” Shumlin said. The target completion date is February of 2014, according to Michael Kuhn, architect with the Department of Buildings and General Services.

Jeffrey Schulz, Berlin administrator, said town officials view the hospital as a “real asset” to the community as well as the state.

During the local review, Schulz noted, “It became very clear this was the ideal site for this facility.”

State officials and mental health advocates wanted the psychiatric hospital located as close to a medical facility as possible. The Fisher Road site is next door to Central Vermont Medical Center.

“This is going to be a state-of-the-art, sunny, beautiful, accessible hospital,” Shumlin said. As he and a line of others who have been involved in the project hefted shovels of dirt, Shumlin said, “Here’s to the best mental health delivery system in America.”